On December 15, 2017, Citi and CME Group revealed the implementation of a blockchain-inspired platform to cut costs associated with back-office operations while simultaneously accelerating funding timeframes on margins. It could free up billions in collateral that banks waiting for settlement would otherwise put aside.
Both financial giants expect to achieve greater levels of efficiency using the system, which will enable real-time monitoring of collateral and technology-agnostic instant clearing house transaction acknowledgment.
Stephen Marx, Head of Futures, Clearing, and Collateral Operations at Citi, explained the platform's advantages. "This technology allows us to eliminate manual touch points, reduce email traffic, and avoid logging into multiple portals," said Marx. "The capabilities in the funding and collateral space create efficiency and improve productivity for our clients."
The API was created by settlement provider Baton Systems. Arjun Jayaram, CEO, described how selective use of blockchain systems intermingle with existing tech to provide cross-compatibility:
"This innovative real-time payments platform is immediately scalable across any financial institution, exchange or clearing house to deliver sizeable operational and cost efficiencies. Its beauty is its simplicity, leveraging the most useful elements of blockchain, while introducing interoperability and extensibility to easily fit with existing technology 'rails' and business processes."
In addition to the immediate benefits of the platform, Baton Systems is looking at other ways to leverage the system's API to tackle collateral substitutions.
According to Sunil Cutinho, President of CME Clearing, the financial house is "pleased to support technologies like these, which aim to provide capital efficiencies to customers."